Outsourcing vs. Offshoring: What is Best for Software Development?

Blog description: The article discusses ‘Outsourcing vs Offshore in Software Development’: The thin line of demarcation between the two. Read about the advantages and disadvantages of each to identify the best strategy for your business. Learn how Clarion Technologies’ bespoke solutions and experience can drive your software development initiative.

Generally, there are two major choices regarding the delegation of software development tasks from a business: either to a local IT entity or to a team situated in another country, which is commonly referred to as offshore development. In this article, we differentiate between offshoring and outsourcing models while shedding light on their separate features so that you can make an educated decision as to which alternative suits your specific needs best.

What is outsourcing?

IT Outsourcing is defined as the engagement of outside vendors or contractors to perform specific functions or assignments related to technology, software creation, or IT infrastructure.

Advantages of outsourcing

Outsourcing enables companies to delegate work to third-party programmers or programming groups rather than hiring additional staff members who would be added onto the organization’s salary roll.

The decision to outsource, motivated by several factors, outsourcing mobile development saves a great deal of time and money. Startups that need to quickly create a minimum viable product to show investors usually are in a hurry. Most often, not possessing technical expertise, the founders depend on outsourcing for the quick realization of their vision about the project. If the project is going to be successful or not is highly doubtful, hence making commitments with in-house teams does not make much sense.

Recruiting costs, taxes, and employee benefits are above the affordability of startups. It is also a long process to build a team from scratch since it takes weeks just to hire staff and set up the workflow. Outsourcing software development will allow a business entity to take advantage of the external team's ready expertise and established workflow that will fast-track the development process and reduce the costs involved, as long as they find good and reliable partners.

Challenges of outsourcing

Choosing software outsourcing services may look like an easy option from the outside. Challenges, just as in any other venture, are a part of it, and outsourcing has its fair share too. The good thing, though, is that while risks are involved, they can be controlled, and you have the power to control them.

A major challenge of IT outsourcing is the improper choice of processes that may make the enterprise lose its competitive advantage. Some tasks should not be outsourced to support the core, but in most cases, profile tasks can be easily delegated to contractors. This can be avoided if proper business analysis is conducted and goals are clearly defined.

Also, the risk of unplanned results: Any oversight during development will result in missed deadlines with poor results. This is more common when dealing with new freelancers or companies that have not been vetted before. More so, if your outsourcing counterpart does not own some specific domain knowledge, they may leave out some important details, which will later reflect on the results of a project. This can be solved by being an active customer or carefully reviewing the portfolio of an outsourcing company. Also, there is an information security concern because sensitive information will be disclosed to a third party, hence necessitating the signing of various forms of agreements like NDAs.

What is offshoring?

Offshoring refers to the delegation or contracting of certain business processes, tasks, or projects to firms or professionals in another country.

This method gives significant advantages to IT companies. It enables them to tap into an international workforce presenting various competencies and proficiencies. Moreover, offshoring allows expenditure reduction through lower wages and ancillary costs that can be attained from offshore sites.

Advantages of offshoring

As the tech talent shortage continues to intensify, offshoring is seen as one of the strategic avenues through which businesses can access the expertise they require, as well as a means for filling in their skills gap. Through embracing offshoring, firms will have openings within a huge pool of skilled tech professionals from various parts of the world, and at the same time exploit several benefits attached to it.

Offshore development gives a business the possibility of tapping into global human resources with seasoned professionals who have good know-how on international projects. Such offshore firms continuously innovate and improve to maintain competitiveness at the global level. By delegating operational activities, as well as reducing the supervision needed to be performed, time and resources are freed within a company for other productive uses. Costs being much lower than hiring local developers, let a business increase productivity by concentrating on its main strategies, hence streamlining processes and getting efficiency in place.

Challenges of offshoring

Though the offshore may turn beneficial, the challenges that get along with it should well be thought of in advance and properly articulated. Time zones pose a challenge in communication since working hours have to be synchronized with the hours of the offshore team. Since different countries offer various levels of English proficiency, it is better to choose development companies that have good English-speaking managers rather than freelancers. Cultural differences are also an important aspect, which means that communication has to be clear and work has to be organized.

Discover some fundamental differences between outsourcing and offshoring below:

When should you offshore vs. outsource your business

Choose between offshore and outsourcing software development according to your specific business needs and objectives analysis:

1. Project Complexity: If you can manage and control an offshore team internally, offshoring will work best for you. If you lack in-house expertise or resources, then outsourcing will work best for your organization.

2. Resource Availability: Offshoring bears enormous cost advantages, particularly in the case of long-term projects or when huge development teams are involved. On the other hand, outsourcing bears the potential to be cheaper when conducting short-term and specialized projects.

3. Factoring Cost: Consider your budget and cost constraints. Offshoring will save on a very large scale, in the case of long-term projects or projects where large development teams are required. Outsourcing would be cheaper if the requirement were short-term or specific.

4. Managing Risks: Evaluate the risks for both approaches. Offshore has a greater risk in terms of communication, cultural differences, and legal aspects. Outsourcing risks quality control, intellectual property protection, and data security.

5. Long-Term Planning: Think about your long-term business strategy. Offshoring allows dedicated development centers and long-term partnerships to grow, while outsourcing gives an option for the project to breathe in the short term with flexibility and scalability.

Conclusion

Offshoring and outsourcing are different paths leading to the common goal of cost-saving, tapping into expertise, and achieving agility. Clarion Technologies is where ideas touch down as reality. It is an international software development company with a good name for offering custom software development, web and mobile applications, and growth marketing services. Client and partner satisfaction in more than 20 countries proves its worth, besides many awards testifying to excellent service delivery on top-quality solutions.

If you are looking for someone to help you bring your ideas into reality, then let us get together and share thoughts. Reach out to us today to start the process.